exploring its options after the stock got cut in half yesterday. it's wednesday, april 26th, 2023 "squawk box" begins right now. ♪ good morning, everybody. welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. if you take a look at what's happening with u.s. equity futures at this hour, you'll see some green with the nasdaq, indicated that it's up by 68 points that's because of stronger earnings from technology stocks

yesterday. s&p up by 13 the dow down by about 20 points. all of this comes a day after all three of the major averages were down. dow was down by 1% the s&p down by 1.6%, the nasdaq down by 2% the tech stock especially microsoft helping to lift the nasdaq this morning. we'll have more on that in a few minutes. you can see microsoft shares alone up about 8% this morning. if you've noticed what's happened with the treasury yields, this morning we're right around the same prices you see it in the green. the 10-eer is at 3.40% if you take a look at what's been happening with crypto prices, you'll see that at least right now it looks like bitcoin is all the way back to 28,874. meanwhile take a look at shares of first republic falling more than 49% yesterday, this as investors were questioning the bank and how it stabilized

itself after losing 47% of deposits in the first quarter. it's trading at a record low. now considering investing at 50 to $100 billion in assets including long-term dated mortgages and securities of course, that would be a bid to try to address what's been a mismatch between assets and lie abilities and avoid a balance sheet to be seized we'll have more at 6:30. we talked about it. >> the high, at least as you just said, down 90%. the high, 171. >> yep. >> it's at 8 so the market cap right now is $1.5 billion. >> this is also the risk in balance, which is why some of the managers at first republic have been unwilling to get the bank going into receiver ship or take a deal at these lower

prices the problem is -- >> -- they're not going to get high sneer they could in six months >> there's been a bit of a -- dare i say, if you talk to the people -- if you talk to people who have been involved in these negotiations, they'll tell you there's been a delusion among the management of this company because what happens is you have this idea in your head that you were worth $150 a share and you add $10 a share and you think, i've got to get myself to $25 to $30, not can i take $10. is that acceptable the other -- by the way, we talk about the hand and the chicken you talk about the banks there's also the government as the other member of the game of chicken. they would like to see a free market solution. they don't want to have to do get involved. >> there's something that goes on all sides coming from the government look, the bigger issue with this is they're trying to get rid of their portfolio, this isn't just a halt in the journey problem. this is not just treasuries

we're talking about. they have a very unique portfolio of very expensive property around sfrarngs wine country, napa valley and silicon valley expensive property that they have long-term mortgages on and very low rates because they were trying to lure people into their wealth business. you have all these mortgages long term. and they're going to be able to sell these they're suggesting they're offering warrants for these things, warrants on stock that's down year to date to get you to pay a higher price for it. >> maybe in six months you could. do you guys see that the 10-year is at -- >> 3.5%.

>> below everything is indicating -- >> -- they're going to have to cut rates? >> no, but they're almost there. when we talk about alphabet and microsoft, i want to talk about it too both companies did better. for example, with alphabet, their ad revenue fell. less than 1% last quarter it was 3.5% so we all know how bad the operating environmental is does the fed know? like everybody is saying, well, based on how bad the macro is right now, these are good numbers. the other was microsoft. revenue rose 7%. it had been rising it's already slowing we could see it. still pretty good. this is a soft landing stop they've done it. they've orchestrated it. we're here. >> i'm in the jamie dimon camp, the jon gray camp. look, i think the people who are in that business and they see what's going on and they're saying you're going to ultimately have to raise rates. >> why for what >> because they don't see

inflation coming down the way you see inflation coming down. >> you think hurting demand is going to hit the last little bit when they've already seen they've been affected. the housing market -- >> even if they don't continue to raise rates, i think it's a pretty tough call that assumes they're going to drop rates. >> things would have to get significantly worse than what we saw from microsoft and alphabet. i was happy. i was happy they haven't totally destroyed it 3% is not bad. i can even live with 3.5%. >> let's see if they're willing to live with 3 pmt 5%. let's talk about shares of pacwest bancorp. it's been rising to $28.2 billion at the end of march. still down from the $39 million in december. they tumbled along with some of the other reelingal banks.

but given what we're hearing out of first republic, this is probably the best news they could have. >> because it's not -- not everyone is first republic, and so they've got some vineyards. >> they've got some pretty expensive -- they've done very low, like 2%. >> nothing in the san fernando valley. >> right if you have these long-term mortgages that you're charging 2% on but you're paying out 4.5% to try to bring in deposits -- >> right then the question is the customer valuable to you anymore? there was an idea that a morgan stanley or somebody would want to own a bank like this. this is before things got worse and worse and worse and maybe you could take the wealthy customers and put them on your platform they had great customer service, but the whole business was predicated on these crazy low mortgage rates that was the whole business. if you can't offer that, it doesn't matter how great the

service is, i don't think. even if it is the service -- >> even if you feel comfortable that fdic would be extended to something like this, i don't think there's a moral hazard problem. the shareholders haven't got squat left at this point. >> this is almost like letting it -- >> at one point it was $30 billion of shareholder equity. it's not $1.35 billion you could learn a lesson from that as a shareholder and a bank. >> this is interesting it goes back to the customer thing. if customers didn't keep as muc money in the bank, they have lots of money, not just $250,000 millions and millions of dollars in cash. if they had spread it out, the whole model wouldn't have worked in which case this whole thing wouldn't have happened to begin with either. so if you could actually -- this goes back to the dynamic of do you care about what the customer

motivation is as well? >> that's why it's similar these two are very similar in that respect for different reasons. silicon valley, all the gnarlyboroughs at 25 with startups -- >> if you have baze, there's a reason to keep that money in there. it's a different thing if you're an individual. >> they understood that community. they under that community. they had yoga rooms and everything else. they were catering to that type of clientele chipotle i don't like it. i know it's fresh. i prefer taco bell you know i do, by leaps and bounds >> mistake, mistake. >> $10.50 a share, shattering estimates of 8.92. revenue was a slight beat.

lower avocado prices it helped improve profit margins with the year-ago period and on "closing bell" overfile, ceo brian niccol who came from taco bell said hire earning customers are returning more frequently, lower earners are visiting more often than six months ago, but their traffic remains down low from a year ago. here's what niccol said about pricing. >> we use it very sparingly. we don't like to take price if we don't absolutely need to. fortunately what you can see in our q1 results, we had great traffic results, great operational performance, and then we also opened up a lot of new restaurants. all things delivered for us in the first quarter. >> and nichol said the chain is

pausing price increases. yesterday was taco tuesday when's the last time you went to a chipotle, and let me guess, burrito bowl what is your go-to item there? a burrito bowl that's what my daughter gets. >> i physically went a couple of months ago, but we ordered in from there i want to say maybe using uber eats. >> so you get a burrito, not a burrito bowl. >> either a burrito or i'll cop to a salad bowl occasionally not as exciting, but better for you, i'm telling you i'm treeing. >> burrito-flavored things that they're -- an enchurve reto or something? >> mexican food, tacos >> yes, yes, true mexican food. >> does it come with an

joeplasty on the side? >> no, but it comes with a -- you may be visiting the house more afternoon. coming up, tech stocks -- not that there's anything wrong with that. tech stocks jumping in the free market we're going to show you a microsoft announcement after the break. later, apple reportedly developing a product that will use artificial intelligence to power a health coaching service. they'll tell you probably no taco bell. you're watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. the people who live and work there. because you call these communities home, and we do too. pnc bank.

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welcome back to squawk we're watching shares of alphabet this morning, the company saying its cloud business is profitable that's for the first time. generating $75 billion in the first quarter versus a loss in the same quarter a year ago. google's cloud business accounted for 10% of the company's toal revenue its customers include deutsche bank, paypal, and u.p.s. the company bought back some of its stock last year, more than any other company aside from apple. we'll get that stock up, 1% this

morning, joe. all right. now to the big jump in the shares of motte earnings up $2.45 a share. revenue of $52.9 billion, beat estimates of $51 billion river knew from azure and other cloud services grew by 30% quarter guidance came in above estimates. the company says it expects artificial intelligence to drive its revenue growth investments in open ai gave it, in his words, a good lead. joining us now to talk about some of the big movers, stephanie link, chief investment management and hightower adviser and also a cnbc contributor. stephanie, it's good to see you. for years, i still can't believe how much windows goes out the door, copies these are huge numbers that

we're seeing we hear that google -- google says, well, you know, our revenue actually declined and it's happened a couple of times now. a decrease of less than 1% i mean that's just a quarter $54.5 billion in revenue then microsoft sees a 7% gain in revenue, which isn't double digit. i want to know about the individual companies and what it says about the operating environment in this economy. >> well, i think both of these companies executed really well i mean microsoft clearly was the better of the two reports. but both really good underneath the surface. i mean microsoft, the whisper number for azure was something like 26%, 27%. i saw a number yesterday at 20%, and it grew 31% constant currency so i think that's the sigh of relief, but commercial bookings rose 12% year over year.

gross margins, operating margins expanded better earnings for sure that's why you're seeing the reaction the stock is down, kind of reversing that. the stock trading at 29 times, joe, i know it's expensive, but relative to its historical average of 36 times, it's actually cheaper on a relative basis. and, of course, google really -- alphabet really good too they beat, not as much, but also their cloud business of 28%. the profitability in cloud really good. i expected youtube to be strong, but search was better than expected as well good numbers from both of them it's nice to see. >> we know about beating lower expectations, but we're supposed to look at it and say versus

last year or the year before, it's not as good was that with the pan domic environment normal or is this normal is this really slowing down or was that not sustainable what we s saw. it's like saying zoom is down. >> i mean, you look at cloud 90% of companies are still on trend, right so there's still such a nice tail wind in terms of cloud. did they all benefit from pandemic of course, they did. and maybe the last couple of quarters, they kind of had to normalize. but it does look like the steady state right now and going forward is very much strong and very positive. we talk about total addressable market, it's really big when you look at market and ai in terms of data sector there's a little uneasiness in terms of higher interest rates and what does that do for long

duration assets and technology and growth stocks, but at the end of the day, it's hard to fight these really amazing trends by the way, i actually thought texas instruments was also interesting. the reason that's interesting is because they have 100,000 customers, right and international, 90% of their business is outside of the u.s. and they actually were okay, right? in industrial and auto and pcs we know pcs is bad and starting to trough a bit. i thought across the board, very encouraging data overnight. >> when i read the intro, i was confused because it's not clear. the company did earn money in its cloud business it generated $7.5 billion in revenue. last year it lost $5.8 billion it lost $5.8 billion that's $7.5 billion in general generated a president of $191

million. this is gobblygook the way we phrased it they were able -- right? we were conflating revenue with that $5.8 billion loss in the year-ago period, but they did make money it was not a lot but on $7.5 billion in revenue, they turned profitable there's so many things in these numbers that it doesn't look like the end of the world. i don't know whether that's good because the fed means it's got to do more i think it's good because it's slower than it had been, but it could be a soft landing. i could indicate we could get a soft landing it's not as good as it used to be. >> you know what, joe, there's so many people saying we're in an earnings recession. by the way, there are so many people who say we're in a recession for the economy. guess what we've gotten about 15, 17% of the companies in the s&p 500 that have reported and 75% of them are beating i know it's againsted lowered

expectations, but these companies are still being able to deliver results no matter what, right? that's very encourage ing and especially on the margin side. margins, at least so far, have actually been quite good and demand has held up demand might fall down a bit because we slow down that's expected. i don't know i think these companies are really -- they're delivering really good results and i think that's something to be encouraged by. >> yesterday mike santony was saying we've kind of taken care of the overbought situation at 3100 on the s&p. below 4100 does that indicate that we might bring that up maybe above the recent highs, even getting stalled out at 4150 or so for like eight months. every time we get a relief rally, do you think there's

going to be another leg up or sell in may kind of sideways action >> well, i am encouraging if technology and come services can do these results that we're seeing from microsoft and alphabet that's 35% of the s&p 500. so that's encouraging. however, for every microsoft and alphabet, you've got a first republic you've got a lot of issues with the regional banks i think we're probably in a trading range, but that's okay we can be in a trading range, but maybe you want to then focus on more stock picking, right maybe this is a stock picker's market this year, which i actually think it is and i think there are a lot of ways -- a lot of stocks that you can own. not only microsoft and alphabet, meta, boeing is going to report later today, ge yesterday. so there's a lot of companies out there -- company and stock

specifics that are very attractive. >> you can't say all tech is good or all cyclicals are bad? some of the cyclicals were not good yesterday so if tech does worse as interest rates goes up, but tech seems to generate growth even in dull periods so you're kind of getting hit with a headwind and tailwind do you like tech or buy value with cyclical? >> i kind of want to have both, right? because that's what we've been talking about. i'm a little more balanced the year i don't want to be all in on one specific sector or underweight in a big way on certain sectors. i think, again, it's trying to find good ideas, and i think there are a lot of good ideas across the spectrum. that kind of helps in these really challenging times, in these volatile times don't get over your skis in terms of sectors, overweight and

underweight. trying to pick good stocks >> very good stephanie, are you going to tweet this hour? i'm not -- the twitter series is dead without the blue checkmark. it affects how many people are screaming at me somehow. how? >> either that or you blocked a lot of people. >> i blocked a lot of people, but -- >> i feel it's quieter too. >> nothing is happening. my son told me if i do not have a blue checkmark, i'm not amplified. >> you're a peasant, joe kernen. >> i'm happy i'm not amplified i'm fine are you still okay are you jonesing for the blue? >> i'm more than fine. i'm happy. >> you are. >> we're all good. >> we're all good. >> we're watching shares of illumina it came in at 8 cents. the dna sequencing company

unveiled plans to try to cut costs to help shrinking margins, shore up margins they've been battling criticism and a market capitalization after a controversial action c acquisition of grail the european commission blocked the deal over competition con concerns illumina has appealed in both jurisdictions. there's a focus on a big proxy fight with carl icahn. in his normal rhetoric, he lays into the company, talks about a lot of things. obfuscation he's accusing them of, how shares included bill gates and jeff bezos leaving, in his words, the others at the

table dangerously outgunned and outclassed we'll ask francis desouza about this in the next half hour. up next, we're going show you what ceos have been saying about the impact of inflation on their businesses we'll be right back. >> announcer: this cnbc program is sponsored by truist wealth, where meaningful relationships matter most. as sleek as it is spacious. as smart as it is beautiful. introducing lucid air. experience the best. ♪ ♪

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kind of corralling it. she's watching all of it good morning. >> it's the biggest morning of inflation which is talked about as a theme you look at the earnings calls that have come down during the peek from 2022 now, companies are still talking about it more than in prior years, but the decline mirrors the underlying moderation in inflation that's underway. that refers, of course, to the pace of cost increase is slowing, but not necessarily declining. and that means higher prices for consumers could be here to stay. for instance, campbell soup prices rose 14% year over year during the most recent quarter procter & gamble hiked its price 10%. coca-cola at 11%, pepsi at 16% that's despite beats and solid margins. there are signs that consumers could start pushing back

one example, mcdonald's ceo says in some places the company is seeing more resistance to pricing than it saw when it began. the trade-off between volume and higher prices seems to be very much in focus here. >> pippa, thank you. we'll see you soon. hilton is out with first quarter results and reporting earnings $1.24 a share. a revenue of $2.29 billion also beat estimates revenue for available room over last year was up 8% versus the same period in 2019 before the pandemic the hotel chain also raising its outlook for the full year and i'm sure pricing is firm across the board. coming up, first republic shares plunging again, yesterday down 50%

up marginally this morning we'll talk about the options the bank is considering to stay alive. we'll talk about that right after the break. as we head to it, a look at yesterday's s&p 500 winners and losers >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

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we'll talk about the options the at&t 5g is fast, reliable, and good morning back to "squawk box. i'm andrew ross sorkin along with becky quick and joe kernen. nasdaq is higher some of the companies are coming up with earnings the s&p 500 up close to 9 points, becky. >> shares of first republic losing about half of their value in yesterday's session, hitting an all-time low, the company reporting a massive drop in deposits much more than the street had been expecting and it now face as critical few days

cnbc's banking reporter talks about it you have banks saying help us or else. >> becky, good to be with you this morning my understanding from bankers working on this situation is that -- and this piggy backs off of our -- david fabers recording yesterday ta they're going to purchase bonds for more than they're currently worth. so the pitch to these institutions, and these are the institutions that have put in $30 billion in deposits to profit off of last month is that essentially if you don't do this, if you don't essentially take a hit to the tune of several billion dollars, this thing is going to go under and if it does, the fdic receivership costs that are going to be assessed on the big

banks will be far greater, in the ballpark of $30 million, so help us now or pay more later is going to be the pitch, becky. >> so either pay more than you should for these lousy loans or we're just going to take the whole thing down i mean that's crazy. what does the government say about any of this?% how are they involved? >> my understanding from the adviser, they're going to need the government they're going to need either the fed, the fdic, or the white house to apply pressure to the banks predominantly just to get them together. there's really a sense of -- it's creating a sense of urgency. obviously the stock is a free-fall event. that doesn't help matters. but really the sense is -- from the banker's side, there's a window to fix this situation with first republic which as we know has been treated as sort of the fire wall. if they can stand first republic up, then the contagion is effectively contained.

if not, there's some questions there. certainly that's going to be the approach and they're relying on the government to help them, get them together in a room and try to coerce them to do this. you're looking at the banks at large. they would like to see some additional pain. you're not coming to the rescue of the shareholders. you're probably interested in making sure the bank doesn't fail because you don't want it to go away entirely, and the other potential problems on top of the fdic fees, and you also don't want these managers who got themselves in a position to come and say, save us and our shares along the way and our shareholders. >> so i spoke to several not all the big banks that would be impacted by this some of them had not heard about this plan, so it hadn't reached them yet others have, via david fabers'

reporting yesterday. if they paid for those bonds, they'd have to recognize the hit. that's not something they're looking forward to there's a lingering distrust of government brokered deals as you know from 2008 they did a bunch of those m and a deals and it cost a lot more. >> why is this i understand mortgages and munis, but isn't the fed kind of opening its window and saying they'll take all treasuries at face value >> i think the issue is this is part of the balance sheet of the first republic it's domiciled there if they pull it out, they have to recognize the losses. this is just -- you know, that's sort of the stew of the bonds that they have

the bet that it wouldn't faushlgs it would rise, that clearly blew up on them. >> hugh, thank you hugh son. coming up, apple reportedly developing a product that will use ai to power a health coaching service a lot cheaper than a personal trainer. think about that. later, katie stockton joins us to talk about what she's seeing in the charts it's like what you searing in the tea leaves same thing as we roll on. we'll be right back. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade

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apple is working on an artificial intelligence coaching service as well as new technology for tracking emotions that's according to a bloomberg report it's designed to keep users motivated to exercise, improve eating habits and sleep better it would use ai and data from an apple watch the make suggestions and create coaching programs tailored to specific users the report says the service is tentatively planned for next year. >> is it any different than -- i've got my aura ring that tells me what to do on any given day. >> leave me alone, god. >> by the way, this kind of service -- >> exercise, don't eat that.

it's like i get that already. >> it all right exists i don't know what they're talking about. that's a different story. >> she's right. >> she s. >> i don't need a freaking watch telling me that, piling on. >> it's your own problem. >> it's not a problem. that's why i look so good. >> yeah, absolutely. absolutely microsoft and alphabet both talking about ai in their reports yesterday. we're going to talk about bets on artificial intelligence next. a reminder you can watch or listen to us live any time on the cnbc app

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shares of microsoft on the move steve kovach joins us now with more details on the quarter and, yes, the ai race. >> more on the quarter and the ai race. >> what you need to know from these earnings reports is microsoft was soaring after beating on the top and bottom lines but it was the guidance for, quote, healthy revenue growth that saw it go higher, up as much as 9%, up 8% now that important azure cloud segment grew 27% year on year and now over to google, that was beat on the top and bottom lines, but growth just really fading overall, revenue growing 3% year on year to $69 billion ad revenue down and youtube as well shares were just up slightly and then its ai, that's the real story. it is clear after listing these earnings, the race is on microsoft talking about

generating actual new sales from ai products already in use with some of its customers. also bragged about gaining search market share, but anything it could gain would be meaningless at this point because of google's dominance there. and google sounding far more cautious on ai, sundar pichai less specific about timing saying, quote, we'll continue to incorporate generative ai advances to make search better in a thoughtful and deliberate way. so if i had to guess, i think we're not going to see anything from google until the developers conference next month. >> did microsoft need to get its search business better earlier could it have been -- could it have been -- are they doing ai now because they're not going to miss this? >> well, it is part of it super charges their search, they're confident they can gain market share against google. >> they kind of missed the boat.

>> oh, yeah. that was aged and ages ago. >> yes but still trying stay here, we're going to continue this. we're going to bring other people into the conversation matt higgins, co-founder and ceo of rsc ventures and author of "burn the boats. good morning to you. this goes to what all of you were talking about, does microsoft plan to make money off of bing? do we think that its search engine is going to be the game changer or is the real game change r going to be this co-pilot service that chat -- with chatgpt effectively inside of microsoft outlook, inside microsoft word, inside microsoft excel, and all of that matt >> i think being as a side show, i do think to some extent it is going to take time for people to even reconsider bing but they don't need to do that in order to win. the most interesting part of the earnings announcement to me was azure ai 2500 customers of 10x.

the case studies were fascinating and they're giving them an advantage as we speak. they're solving really complicated problems using their enterprise solutions and they're beginning to create a gravitational pull for microsoft that is going to make more and more companies want to jump in and say, hey, do this for me >> where do you sit when it comes to google? why has google taken its time even though clearly they were ahead of the game to begin with? >> i think what i read into sundar pichai's statement on being responsible and deliberate and taking their time, i just read that as, oops, we got caught with our pants down here with microsoft moving so quickly. >> is it oops or is it we think that microsoft is being irresponsible? >> that was also my question if sundar pichai was sitting right here, i would ask is the implication there that microsoft is being irresponsible we know that bing ai is not perfect and we know that google's own product is not perfect. so are they waiting for perfection or is this an excuse?

>> what do you think of that part of the other thing is microsoft always had -- not always -- but last 20 years has done a lot of work in washington to have a better relationship with washington. regulatory community thinks they're responsible. so maybe they have more leeway than google feels it has given its more challenged relationship with washington. >> i think it is a total excuse as a talking point google has been finishing our sentences for how many years that's ai. they had the solution in the building they're like kodak 1975, had the digital camera whathappened they had an employee uprising so they relatively hit pause, kept shelving product, not pushing product, instead of hiring engineers, they hired ethicists. i think they're grasping at straws and using this argument and i think -- i don't think they deserve to be in the same conversation right now. >> i'll throw a third name that deserves or doesn't deserve to

be in the conversation you talked about azure, where does amazon play into all of this >> they want to do what matt was describing, what azure is doing is hosting all the services. that's exactly -- when you spoke with andy jassy, that's where they see this going. they're coming out with their own ships to process this stuff, they have a partnership with ai company hugging face all of this, it is a cloud play. and just to his point also, that's what it is all about. it is a cloud play that's why they're buying activision it is a cloud play. >> matt, to that extent, though, when you think about that, how important is the open ai, generative ai product that microsoft has to layer on top of it, which is something that right now amazon does not have, though they're building all sorts of other products, it seems like. >> tremendously important. what happens is it creates commoditization around competitors, right you're hosting cloud, but what else can you do for me now the expectation, it is happening to me. i'm looking across my portfolio

saying, wait, i have that problem. if i just switch cloud services from amazon to microsoft, i can get all that too so i think it is vastly important. i think you're going to see them pulling away market share from amazon and i'm sure it is happening already. i'm already reassessing my entire portfolio. >> that's a great name i love that name i like the book behind you that expression, matt, you must know, it is 500 years old, that expression. >> this is why i wrote the book. we wrongly attribute it to a cortez it is not appropriate. it goes back to the beginning of recorded history, stories in every country about burn the boat. >> cortez got to the new world with 600 men said burn the boats and all of them said, boss, boss, can we just -- but they burned them and -- so it goes back to the beginning of time. >> it goes back to alexander the great. >> alexander the great wow.

>> alexander the great the chinese had a story from 206 bc and they had a word for it, burn the boats. >> on "jeopardy," if i say who is cortez, will i get it right or wrong >> you'll get it wrong but they won't know you'll get it wrong, so you'll get it right. >> matt, someone has to burn the boat in this tech context. who is burning the boat? >> who are you going all in on >> yeah. >> going all in on microsoft and i'm an investor in nvidia, they have tremendous pricing power right now that i don't see going away for a period of time and you're looking for anyone who is pursuing medical solutions that's the real unlock we haven't seen yet >> we did talk about apple separate topic we'll bring it back. matt, thank you. >> still to come this morning, we will talk to francis d'souza about the company's earnings and the proxy battle with carl icahn. as we head to break, check out shares of visa, earnings and

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good morning stocks set to rebound after their worst day in more that be a month. futures are muted as investors wait for quarterly results from boeing this morning. those numbers are expected shortly. big beats from alphabet and microsoft. the latter rewarding patient shareholders in a big way this morning. we're going to break down the quarter and what the companies are saying about ai. and speaking of tech, it is decision day for a key u.s. regulator that is holding up microsoft's $69 billion deal for activision blizzard. we'll talk about that as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc live at the nasdaq market site in times square i'm andrew ross sorkin with

becky quick. a number of big earnings reports moving things around looking at the nasdaq up 124 points the dow off about 26 points, the s&p 500 off just about 6 points. let's show you treasuries as well we have been talking about first public bank and other banks including pacwest as well. the ten-year note at 3.409 two-year, 3.918. dropped under 4 again. thinking about oil, wti crude, you can buy it by the barrel, it will cost you $77.19 and then meanwhile, crypto, that's been our barometer of risk on and risk off, bitcoin up at $29,000 had been a little bit under $28,000 before. >> up 5% to dom chu with a look at this morning's premarket movers hey, dom. >> joe, let's start with that aforementioned first republic that andrew just mentioned and alluded to the embattled regional lender is down nearly 3% now, but it has

been jumping around in premarket trading. now down over 10%. again $7.28. it was down 3% ten minutes ago after it lost nearly half its value yesterday in a brutal trading session brought on by an earnings report that showed a much steeper drop than expected. now reports are that first republic could be eyeing asset sales as a way to shore up its balance sheet and possibly negotiate with other banks to get deals done for those assets. so, first republic shares down 10% right now. we're also watching shares of hotel operator hilton worldwide, which are fractionally higher premarket. it reported profits at both top consensus analyst estimates. a key measure of operating efficiency rose sharply and remains above prepandemic levels hilton raised the full year guidance those shares up nearly a percent now.

and we'll end with a check on tesla, always a big volume mover in the premarket, up fractionally right now nearly 400,000 shares of trading volume the electric vehicle giant is getting a downgrade over at jeffries where analysts say it is a hold rating versus a buy rating the target goes from 285, it was 230 bucks before they cited lower earnings multiple given the new paradigm of being aggressive on price cuts overall tesla shares up despite that downgrade. it was down about a percent or so, joe, in yesterday's session. >> all right, dom. we got some stuff we want to talk about i love cross talking with you, but we can't sorry. >> that's okay >> that's okay. >> we have big news out of the uk on the activision microsoft deal the regulator there blocking the deal to protect innovation and choice in cloud gaming and steve kovach is here looking through some of the flashes that we're just getting we knew a decision was coming. >> this is a big one >> this is a surprise. >> sort of a surprise.

they were always considered the one that would reject the deal, but several weeks ago they cut a -- they dropped off their case and so now -- but they are hinging on this idea of cloud gaming that if microsoft is allowed to buy this company and they put games like "call of duty" on there, it gives them an unfair advantage that they see growing. this is unproven you subscribe to this xbox service. >> i do. >> it is unproven. it is not perfect yet, but the idea is it is like the netflix of games where you pay a monthly subscription instead of having a disc or downloading the game, you stream it to whatever device, very small market right now, big cloud play for microsoft, that's kind of why they want to buy this company, but what microsoft can appeal, i think they probably will try to appeal but this is a really big hit. >> i think this is a huge surprise >> 11%, 95 bucks a share. >> in terms of a timeline of what an appeal would look like >> unclear right now unclear.

but, you know, it is my understanding microsoft would love to appeal this and keep moving forward and they were hoping for an approval today, but maybe with some conditions which they would have said yes to, but this looks like a straight no. >> they can appeal this, but i thought there was no appeal situation. >> i'm told there is an appeals process. we'll see. we're waiting for microsoft to respond to this. they're probably not happy in redmond right now. >> activision blizzard shares down 12%. >> if the appeal doesn't work out, if it is messy, too expensive, this could be the end of it. >> all the guys that made the great trade with the calls purely by chance are they all out of this now, like warren buffett? >> there were a lot of people who -- >> berkshire got in like the december before, i think >> you're saying everybody -- is everybody already out? >> they all got -- >> they didn't sell. >> they didn't >> they did not.

my understanding as of several weeks ago was that nobody had sold >> and they got in at what >> much lower price -- >> less. >> less than $95 for sure. >> who plays the violent games in your house? >> we don't play violent games simulator. you know what that is? >> i have an idea. i know what a flight simulator -- >> exactly >> is it about flying and simulated flying >> yes. >> i think i know that. >> i have sons who would like to be pilots. >> who wouldn't? >> we'll continue to follow this story and have more for you as we hear anything about it. steve, thank you very much in the meantime, our next guest is holding her year end target for the s&p 500 at 4,000. that's down slightly from yesterday's close. she also maintains that small caps are still more adequately priced in terms of risks of a mild recession for more on the markets and the

earnings season so far, let's bring in jill carey hall, head of small and midcap strategy at bank of america global research. good to see you. >> thank you for having me. >> you think the small caps are actually accurately pricing in what you think is most likely to happen >> i think that they have been pricing in the risk of what everyone is expecting, maybe not everyone, but what most are expecting now, which is a recession. and we are expecting a mild one. i think, you know, for small caps we did get tactically cautious in mid-march, amidevera amid everything going on with the regional banks they have more exposure to banks. so, for the near term we have been caution, but i think if we avoid a major credit crisis and see more of the mild recession that we're expecting, then i think the longer term case for small caps is still in tact. there are bigger beneficiaries, bigger beneficiaries of services

spending, more resilient than goods spending and trading at near record low multiples versus large caps which valuation isn't super predictive over the short-term, but, you know, if you have a multiyear time h horizon, longer term it could be a good environment to overweight small caps so tactically cautious but longer term we think the case is in tact. >> okay. so the case being in tact, what would change your mind what do you think as you look through the earnings season so far? what you hear about the economy at this point, and what companies are actually expecting for the full year? >> sure, well, i think small caps are certainly more economically sensitive and on one hand, they have been pricing it in, small caps are very correlated to the ism manufacturing index. but they're pricing in about 41, so below current levels. i think we do see more downside risk across the market and the earnings backdrop we're paying close attention to guidance this earnings season. it is still pretty early, especially for some of the smaller companies which have yet

to report. but, you know, early reads on s&p 500 guidance have actually held up better than expected so, you know, think that's one thing we're going to be paying attention to i think a longer term risk to smaller stocks and overall for corporates that have more leverage is that, you know, if we do see a backdrop where interest rates rise again, the smaller companies do have more leverage and more shorter term floating rate debt, so that is a longer term risk to smaller stocks if they need to refinance some of the coming due several years from now. >> okay. let's just take about risks in terms of, you know, things that you -- that we know could potentially get worse, like the banking sector, things that have gone through the credit crunch how does that potentially affect things >> i think overall, we're in an environment right now where with the market especially going into the summer could be volatile, but near term our view on the market is that positioning has

gotten very negative we have seen cyclical sectors in general, active funds have purged their positioning in these areas relative to defensives investors have reduced allocations to equities relative to bonds so our view for the near term is to stay invested, to fever cyclical sectors for the quarter. i think the -- as we mentioned, we have been more neutral on the market overall, tactically cautious on small caps but longer term is an area we could see more upside than for larger stocks. >> jill, want to thank you very much for coming in today and with all this breaking news. back to microsoft activision we have a statement from activision on this if you are just turning us on, the cma, the uk's regulatory body, saying that it is still opposed to the microsoft activision deal. it says that the deal reinforces microsoft's advantage in the market by giving a control on

important gaming content like "call of duty," "overwauctch" ad "world of war craft. the cma's report conflicts the ambitions of the uk to become an attractive country to build technology businesses. we will work to reverse this on appeal the report's conclusions are a disservice to uk citizens who face increasingly dire economic prospects. we will reassess our growth plans for the uk global innovators, large and small, will take note that despite all of this rhetoric the uk is clearly closed for business activision saying they will promptly file an appeal and judicial review on all of this you can see microsoft shares up by 7.3%. activision shares off by 11% >> hard to understand -- do a little more work to figure out

the timing all of this is the timing. >> the deal had to be closed by july. >> that's what i thought a statement from brad smith, by the way. >> microsoft. >> he says we remain fully committed to this acquisition and will appeal cma's decision rejects a pragmatic path and discourages technology innovation and investment in the uk we already signed contracts to make agent v make activision's games more available. we're especially disappointed after lengthy deliberations to this decision. it is a flawed understanding of the market and the way the relevant cloud technology actually works >> and microsoft was up more than that earlier on earnings. you go, oh, my god, they must be happy. that's not the case. >> it has come down. >> because of the strong e earnings report they came out with. >> so that's misleading. >> we're going to have to

continue to dig through this >> how much is your subscription >> i got to get some of my old arbitrage friends on the phone right now. >> that's what it looks like here how much are you paying for that thing? what do you got? >> $8.99 >> does it have a blue check you got rid of the game? >> oh -- >> maybe he wants the game. >> the games. >> he wants it >> as opposed to the -- >> we prefer the freudian slip the game >> if there was no stigma to getting the blue check, wouldn't you want a blue check? >> i don't know. it would help. >> it used to mean what it used to mean, sure. >> when we come back, we'll continue our conversation about this microsoft activision deal and what is going to happen next plus, a house republican bill to raise the debt limit while cutting spending could be voted open as early as today

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the house could vote as early as today on the republican debt ceiling proposal. our next guest says he fears

only a stock market crash will break the partisan stalemate joining us now, democrat jim himes. and congressman, who would be blamed if -- i know who you would like to blame, the gop and the republicans in the house, but who do you think the american people would blame? kevin mccarthy or joe biden? president biden? >> i think on balance the answer to that question is most people will blame the republicans and i say that because, and by the way, there will be plenty of people who say washington can't do anything, but the american people saw during the four years of the trump administration the debt ceiling raised three times. they may not have seen it because guess what, the republicans under president donald trump did not do this they did not say, let's achieve the dozen policy objectives or we'll wreck the economy. so, blame, of course, is not the critical element here. the damage that could be done in the capital markets and the

damage that could be done to the real economy is the critical element. but we have seen this movie, i've been doing this for a while now, we've seen this movie a bunch of times and the american people realize this is a ridiculous, dishonest and dangerous enterprise and shouldn't be used as a negotiating tool. >> you were around for this, 2019, i'm looking at a cnn article, house speaker nancy pelosi said late tuesday she's seeing progress in her twin budget and debt negotiations with treasury secretary mnuchin. that was one of the times during the trump administration that you're alluding to and then there is actually another time where we were engaged, speaker pelosi was engaged with the trump administration negotiating parts of the budget during the debt ceiling. it happened before >> we do negotiate the budget. that's what our job is >> you heard right, it said twin

talks. twin talks between the -- >> but at no time, at no time did nancy pelosi or the democratic leadership say to the president unless you agree to our demands with respect to the debt ceiling, we're not going to raise it that was never, ever said. it was never said in the four years of the trump -- of course we negotiate the budget. we negotiate the budget hard that's fair. by the way, if the republicans want to try to pass a bill which achieves all of their objectives they have got in this mccarthy bill that was finished up at 2:30 in the morning last night, fine what is not in our job is to have one party say we have decided we're going to take this hostage and unless you pass our objectives, even though you got a democratic president, we're going to wreck the economy that was never part of the deal. >> you do have some colleagues that i don't know whether they're getting anxious about what we're talking about, the

blame game and how it works, but here is another article, house dems call on biden they mentioned debbie dingell of michigan and landsman of ohio, he's a first termer, i think of course, senator joe manchin has been outspoken on -- asking the president to talk to mccarthy and jared moskowitz they have a whole slew of people that you work with on your side of the aisle that think there should be some negotiation if the republicans successfully pass something today, do you think that then the administration should engage and have talks with speaker mccarthy >> look, people have different views. because negotiating with a hostage taker and make no mistake, that's what is happening right now. negotiating with a hostage taker is always a controversial thing, right? the israelis don't do it with terrorists we negotiated to get a basketball player back from -- it is always a difficult

decision to choose now, the prudent thing to do would be to say there is so much at stake here, the stability in the capital markets, fundamental belief that my colleagues who believe that that makes sense are not crazy for saying so. the president takes a different view and i take a different view too. we -- our job is to negotiate. our job is to have votes in the house and the senate over things like eliminating the president's -- this is one of the objectives, eliminating the president's debt, student debt relief -- fine that's fine. we should debate and argue over those things and legislate what doesn't make sense, and this is why i fall into the camp of let's get rid of the debt ceiling because it is a dangerous instrument that never achieved a single policy goal, the -- i come down on the side of the constitution, our rules, basic concept of democracy, don't say we make policy by threatening the stability of the united states economy. >> but, when -- so speaker

mccarthy will say, here we are, we're raising the debt limit a trillion and a half or so, republicans are giving you this offer, let's talk with -- maybe you don't -- maybe republicans don't get the student loan thing, maybe they don't get a lot of different things. would it really be so bad if both sides agreed on something that would cut spending as a result of these negotiations that would be the end of the world if it wasn't a clean debt limit, if something that both sides could actually agree on that would help and that was a -- >> no, it wouldn't it wouldn't. >> that would be a bad thing. >> yeah, no, look, i spent my entire career here working with republicans. i want to draw the distinction between working with republicans in normal legislative order, where, you know, they have the house, we have the senate, that's all fine. i'm in favor of it by the way, at the end of the day, if there is a deal that, you know that the democrats and the senate, the democrat in the white house and the republicans in the house agreed to, i'm likely to vote for it. i've always -- that has always

been my belief what i'm saying is that as a legislative tool, the american people and all of my colleagues need to think about whether being able to hold the economy hostage is a good context to have that negotiation. >> i got that. everybody tries to use leverage. if it came down to it, you wouldn't hold out -- if it was your choice, you either get a market crash, which you're talking about, which i hope that that doesn't happen, or if you can't get a clean debt raise, would you rather have the market crash? >> of course not of course not. i've been to ones that -- kevin mccarthy has 21 members. he can only lose four votes and has 21 members in his conference that have never, ever in their careers voted for a debt ceiling increase so, no, of course i wouldn't prefer that. i'm making a larger point which is this is a very dangerous

game, and what we should really do is get rid of this absurdity called the debt ceiling because it has never served the purpose of controlling debt and whenever and only when you have a democratic president and a republican majority in the house does it get used as a negotiating tool, the failure of which means the destruction of the american economy that as an overlay is a bad idea if there is a good deal, i will vote for that good deal because i'm not a neoist, right? >> i hope so too, congressman. good having you on this morning. i understand what you're saying. and i think -- i think it is going to work. i think something is going to happen and, i don't know, maybe this will be the beginning of a foundation we can build more bipartisan, one way or another. >> i hope you're right. >> thanks, congressman next hour, we'll hear from ways and means committee chairman jason smith. that's at 8:10 eastern time this morning. when we come back, carl icahn versus illumina.

we'll be speaking to illumina ceo francis desouza about the company's clash with the activist investor, earnings from last night, what they're seeing right now in sales, much more. and then boeing set to report quarterly results. the numbers and the market reaction is next time now for today's aflac trivia question. what year did google change its name to alphabet the sw wn anerhecnbc's "squawk box" continues i could really get used to this retirement thing. ahhh! coach k, there's a goat here. the story of my life. no coach, there is a goat here! whaaa! what's this? a thousand dollar hospital bill? but i have good health insurance! gaaaaaap! did you say 'gap'? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? gaaaap! aflac! gaaaap! get help with expenses health insurance doesn't cover at aflac.com you know doug, ever since switching to workday you've been a real rock star.

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now the answer to today's aflac trivia question. what year did google change its name to alphabet the answer, 2015 all right, news out of the uk, just in the last 25 minutes or so, about the activision microsoft deal the regulator there blocking the deal, they say to protect innovation and choice in cloud gaming activision's out with a statement this morning saying the cma's report contradicts the ambitions of the uk to become an attractive country to build technology businesses. we will work aggressively with microsoft to reverse this on appeal the report's conclusions are a

disservice to the uk, who face increasingly dire economic prospectses. we will reassess our growth lens for the uk, global innovators large and small will take note despite all of it rhetoric, the uk is clearly closed for business and microsoft's brad smith also putting out a response to the decision saying we remain fully committed to this acquisition and will appeal. the cma's decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the uk we already signed contracts to make activision blizzard's popular games available on more devices and remain committed to reinforcing the agreements through regulatory remedies. we're disappointed after lengthy negotiations i believe they went on to say this was the decision that came on right now microsoft shares are up by about 7.3%, but as joe pointed out they were up more than 8% before we got this news. so it is a little bit lower. the games coming from the strong

earnings report last night activision blizzard shares down by 10.3% we'll have the details on this developing story in a bit. "squawk box" will be right back. it's hard to run a business on your own. make it easier on yourself. with shopify, you can have everything you need to streamline your shipping, returns, and product storage, so you can focus on growing your business. because when we work together, the future is bright. it doesn't have to be lonely at the top. join the millions at finding success on their own terms. start your journey with a free trial today. do you ever worry we'll live forever? no, it's literally never crossed my mind. what if we live to like 100? that's 35 years of being retired. i don't want to outlive our money. and i have been eating all these stupid chia seeds! i could totally live to be 100! why do i keep taking such good care of my- since we started working with empower, we're able to get all our financial questions answered, so we don't have to worry. so you never- no. never.

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welcome back to "squawk box. i'm phil lebeau in washington, d.c. at boeing's headquarter where the company just reported its q1 results, a wider than expected loss of $1.27 a share that is above or wider than the expectation of a loss of $1.07 a share. revenue did top estimates at $17.9 billion. they do have free cash flow negative, $786 million, that's better than many on wall street were expecting there is the charge in the first quarter of 245 million for the kc 46a tanker. that is not a surprise to wall street so why are shares moving higher? now up more than 3%. it is the guidance from boeing this is going to reassure boeing investors. on the financial side, they are reaffirming their plan to earn $3 billion to $5 billion in free cash flow for 2023 reaffirming $10 billion in free cash flow, that's the target for 2025 to 2026 so a reaffirmation on the free cash flow.

on the production side, more reaffirmation. they are reaffirming 737 max deliveries of 400 and 450 this year there was some chatter, some perhaps expectation that they might reduce that anticipated delivery guidance. that's not the case. they're sticking with that despite the issues with spirit aerosystems and the fuselage issue that came up a couple of weeks ago. for 787 deliveries, they're reaffirming to deliver between 70 and 80 which year the 737 max production, it rises to 38 per month later this year. that was anticipated on wall street but now they're saying for sure they will go to 38 a month later this year from 31 per month. and by 25, 26, they expect to build 50 per month of the 737 max. 787 production rises from 3 a month now up to 5 a month later this year and then up to 10 per month in 2025, 2026.

lots to discuss with boeing ceo david calhoun, coming up a little bit later on today on "squawk on the street. don't miss what he has to say and we'll talk about this miss, guys, because it gets to the heart of an issue that we hear from a lot of companies and it has to do with the supply chain and the challenges there it is improving, but it is still a challenge on the cost side, that's one reason why you see boeing shares or boeing delivering a miss on the bottom line for the first quarter but that production guidance, that's the reason the stock is moving higher. that is good news for boeing investors. guys, back to you. >> okay. phil, thank you very much. in the meantime, dna sequencing company illumina posting better than expected results. the company has found itself right in the cross hairs of activist investor carl icahn and a proxy battle the illumina ceo francis desouza joins us now on cnbc thank you for coming in. >> thank you for having me.

>> let's start with the numbers from last night. they were better than had been expected what is happening in the core business right now >> yeah, sure. we're really excited about the way the year is starting in terms of the launch of our flagship product which is our high end next generation sequencer, the most powerful sequencer on the market. we announced it in the fall and started shipping it in q1. couple of things played out in q1 for us. one, strong customer demand for the sequencers we're seeing that demand from high end research institutions, but also interestingly 40% of the demand is coming from the clinical customer base and that's usually a customer base that takes a little while to absorb new technology really strong demand from medical device companies that are doing diagnostic testing services, cancer therapy selection services and a lot of new sequencing customers on the one hand, we're seeing really strong demand, we exited q1 with 200 orders, which is the strongest book of demand we had for any sequencer we ever launched and on the other hand, we have seen our manufacturing ramp very

nicely we were expecting to ship between 40 and 50 units in q1, and we shipped 67, so really our operations have done really well. >> how much do these things cost >> retail is $1.2 million. >> so better than expected demand, some places you didn't plan on seeing you're also talking about cost savings, reducing expenses by $100 million a year. annually on that run rate, what do you do to get that? >> so our focus now is now that we shipped the sequencer, we're looking at increasing our operating margins. historically we operated in the range of 25 to 30% in terms of our operating margins, and this year we're at 22, we had a lot of investment to bring out the new product. and so what we're committing to is bringing us back to 25% operating margin next year, and then 27% the year after. so we laid out a plan that, you know, looks at expenses across a number of dimensions one, we have a global footprint and we're going to take advantage of activities in lower cost locations, we're

rationalizing our real estate portfolio, i.t. optimization >> if you're looking at this chart, over the one year, stock is down 27%. that's in large part because of all these questions about the grail acquisition that regulators in the uk and -- in europe and the european commission and here in the united states have said, don't do the ftc has specifically said you got to unwind this whole thing. that's created a lot of questions, that's why carl icahn has got nten into the mix he thinks you would be better off without this and he can get rid of grail faster than you can. >> let's start with what grail is what grail is a blood test we developed at illumina that, you know, you can do and it is a doctor-ordered test and tells a person if they have one of 50 type of cancers from early stage to late stage. it is a huge breakthrough test it has been in the market for about 18 months now. and the customer demand has been

really strong. >> this one really works >> this one does and so, you know, the first 12-month revenue ramp for grail has been the firstest of any cancer screening test in history. what we announced in q1 is demand continues to be strong. we saw 100% growth in terms of the revenue associated with grail from q1 of last year to this year. 20,000 tests delivered in q1 now, we spun it out so we could do the clinical studies to bring the test to the market and reacquired it. the reason why we think it makes sense at illumina, we can accelerate bringing this test to more people than grail can do on their own. they're planning to roll it out only in the u.s. and the uk by 2030 at illumina, we can expand the footprint of that test we operate in 150 plus countries around the world and we have teams that are experts in bringing reimbursements for tests we can make this test more

available to people who can't afford the $950 test and roll out to more quickly. >> that makes sense. but the regulators have said no. i don't know what the reasoning is for it. but it does have a lot of people including some wall street analysts who anticipate that the most likely thing is this thing is going to be spun back off, that you're not going to be able to be the regulator saying no. >> we're working as you said both in the u.s. and the uk. and the u.s., the ftc ruled in favor of illumina during this deal and against the ftc the commissioner overruled that. we're going to court and the u.s. 5th circuit court of appeals granted an expedited review we're going to court only time this was reviewed in court was at the ftc laj. >> what is the timeline for that >> end of this year, early next year so the two legal processes play out in that same time frame. the u.s. 5th circuit court of appeals decision is expected in that time. in europe, we have a jurisdiction decision appeal that is also going to play out.

>> the cost to you if you lose >> in parallel, we're moving in divestiture as fast as we can. what is happening is the divestiture isn't being slowed down it is not really a differential between us keeping the appeals going or not we're still moving as quickly as we can, you know, on the divestiture path. >> you tdo you think it was a mk to go down this path i ask only because of the question of how much mind share it takes you and your management team and the board vis-a-vis this one unique transaction, and how transformational you might do this one transaction and managing the business you already have >> at this point, it not a lot of bandwidth of the executive team of the board, it is in the external legal teams as you see from q1, our team is focused on our core business that's what led to the strong results in q1. the vast ma rt jority of the con

are focused on the core business the regulatory process and legal process is playing out in the background, but not really taking up the resources in the company. >> but at the same time, now you have carl icahn, just -- if you start thinking about the mind share that all of this takes, right, both the transaction, i know you're saying no mind share used, but -- >> $800 an hour to worry about it. >> i know. but you're paying $800 an hour, you're still spending some time -- >> they got saul goodman false positives and false negatives, what is more -- i just don't know how perfect this test is? is it 99%? >> that's one of the breakthroughs of the test. we set out to create this test we said for it to be a true population screen, it needs a false positive race of less than 1% which would be extraordinary. >> i tried to decide what i would rather have. i don't want either. it is a hard business to be in false positive, i got kcancer

false negative, you don't know you have cancer. either way -- >> you want an extraordinarily low -- and the positive predictive value is well above, you know, the other screens that exist for the five cancers that have other screens, but, remember, 45 of the cancers that grail looks for have no other screens. pancreatic cancer. those are some of the deadliest cancers. and we know if you catch a cancer early, a deadly cancer like pancreatic cancer, your odds of survival are much better now we have many examples of people even in our company where we rolled it out where people are saying, look, i found a pancreatic cancer, i've been treated and i'm healthy now. that's a big deal. >> francis, let's talkicahn, he you guys and has some letters he put out. he calls you -- he said you and the board are obfuscating the truth, said your credibility is suspect, throws all kinds of

charges at you and the board, he wants you out, and is telling your shareholders this >> here are the things we're going to be doing to drive shareholder value. so stay focused on the core business, continue to drive the growth and the scale this year and stay focused on margins and drive operating margins to 25% next year, 25% next year what we're going to do our investors with our plan so create shareholder value and that's what we're going to focus on. >> did you start conversations with carl icahn, did you try to be constructive, what happened >> at the beginning of the process when carl engaged with us, i did talk to him and we went to florida to meet with him and our approach was to try to settle this and avoid a proxy battle we engaged with him about what we could do to avoid this path and we talked about adding, you know, a board member from icahn on to our board and independent board members. we didn't get anywhere because

carl wanted two of his employees and one ex-employee on the board. as we look at what the company needs going forward, we lay out a skills matrix on what we need for the booard of where the company needs to go. we laid out the profiles, one is a public company ceo in the healthcare space focused on growth ideally manufacturing as well. the second is a profile of a public company cfo with wall street background. so, these are the profiles we're looking for. let's find independents that meet those profiles. and so, independently we have been doing that, we started with 50 people on public ceo side, down to the last few now, similarly on the cfo side, but couldn't converge and that's where we are now. >> you may not be counting votes as closely as kevin mccarthy is now on the house, where do you think things fall? >> it is early in the process. we still have four weeks to go before the annual shareholder meeting. and a lot of the voting happens in the last couple of weeks. so right now we're still focused

on the outreach and engagement. >> francis, thank you for being here today come back, let us know how it goes. >> thank you coming up, we're going to talk about uk regulators blocking the microsoft activision deal, the big news of the morning. we're going to break down the decision next. check shares of first republic, the other big news of the morning. at 6:00 a.m., up 2%. but they have now reversed course you're looking at that stock off 13% after it dropped 49% yesterday, we're at $7.02. remember, this was a stock trading as high as $170 a year ag enitn e last year. we're coming back after this

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. breaking news earlier this hour we have the latest on this >> cma rejecting the deal and making the argument it would give microsoft an unfair advantage in cloud gaming if it was allowed to buy activision. cma dropped a huge part against

the argument that focused on the console gaming market. now the argument is microsoft has a dominant share today and the cloud infrastructure to run it it's unique in that position and owning "call of duty" will give microsoft an unfair position in cloud gaming and microsoft's president, brad smith, saying microsoft will appeal we know the cma is likely to say no again this is not how microsoft wanted it to go they were prepared to accept some conditions, like guaranteeing nintendo it can get a "call of duty" video for a decade we're still working through the ftc lawsuit. if microsoft can't win, they appeal, the deal will likely

die, a $3 billion deal, guys >> and we were talking to those familiar with the deal, they walked away. it's tough to appeal brad smith said we remain committed to enforcing these agreements by regulatory remedies >> this is what they've been toin doing the whole time >> i don't know what they can offer. microsoft, such a small piece of the gaming market. sony is the real winner here because they are the leading in console gaming by a long shot. microsoft is like number three in gaming. >> the other thing the cma said is it would give microsoft an advantage if the market by giving it control on important

gaming content like "call of duty," "overwatch" -- they want them to split off some of the games? >> nvidia said we'll give you "call of duty. they're already proving they're willing to do this >> if they're prepared to sell one or two of the games, what do we think would move the needle >> even the cma admitted when they revised their initial decision -- i'm not saying they're right. even if you're negotiating irrationality. >> it kills the deal for microsoft if they have to spin off "call of duty. that's what activision so popular. >> if it was sold to a third party back to microsoft -- >> that would be weird

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activision the shares are falling hard on the news meanwhile, boeing gaining in the premarket, the plane maker reporting mixed but upbeat guidance the struggling first republic bank has a pitch from the nation's biggest financial institutions help us now or end up paying more later the final hour of "squawk box" begins right now really good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures are up a little bit morning, a couple of good reports late yesterday. treasury yields take a quick

look treasury yields are indicated to be a little bit lower than recently we have the two-year down below and the ten-year regulators moving to block microsoft of video game activision blizzard. they say the deal raises concern in the evolving cloud gaming market in a statement activision said z global innovators will take notice rich, my joke was before we came back, if the u.k. ever has two new decent companies trying to do something, maybe we'll block them but that probably isn't likely any time soon but what's the deal here >> look, i think there's a

bigger problem just globally we're seeing more and more transactions being blocked of companies that don't really seem wad bad for consumers. it is a nascent market even today. this transaction is not anti-consumer. i think the market definition that regulators are using and have looked to both to the u.s. and abroad are just flawed we'll see. it's going to be interesting what happens from here but the market definitions and the fear of restriction of competition just seem completely unfounded it's just, you know, just again very, very disappointing >> rich, we've seen this movie before, not necessarily in the u.k. but in the eu and in socialism land, they don't care about consumers. they care about they have some idea that employees at antiquated companies should never lose their jobs because they might in restructuring, you

might move forward into the future and things change and there won't be any buggy whip -- there would be still be buggy whip makers in the eu. >> i've seen force write letters attacking the warner brothers/discovery merger, as if there isn't layoffs across all media, old media, big tech the whole thing is essentially absurd >> catalytic converter employees, the biden administration might put a few of those people out of business. >> why don't we stop a.i. because of what it might do to certain jobs >> here's the thing i can't figure out there's a view now that the biden administration here in the united states is anti-deal making, right? and there's a whole bunch of companies, especially in the media and technical space that say, okay, maybe there's a

different administration in '24 that the world would somehow be different. we talk about the future of warner brothers, discovery, paramount and whether comcast could do something or microsoft could do something, some of the tech companies could buy things. then i start to think to myself, if former president trump becomes the president again, it's not so clear that he's so happy about media mergers. he's never been happy with media mergers, we've seen that before. desantis in florida has been making life quite miserable for disney so do you think that the whole -- on both political sides it has moved in this sort of unique direction or something else is happening? >> well, i would almost leave this almost as an aside, andrew. it's actually more challenging overseas, right? i mean just yesterday daniel ek of spotify talked about how he

was disappointed and they're seeing a lot more traction in their case and the challenges of big tech overseas. this case in the u.k. have been far more difficult for big tech companies to navigate and i think that's part of what you're seeing today i think sort of that global landscape. all of the companies that you and i have been talking about are global it's not just about u.s. approval, you need global approvals. >> is, therefore, your takeaway that for the next decade when you look forward between whatever you think is happening in europe right now and potentially whatever you think is happening in the u.s. that actually deal making is not -- there's not some closed window now that somehow opens later >> i don't know but i think it's certainly an advantage to some of the smaller companies that aren't threatened by this. you never hear the word snapchat when you think about regular at

this pushback. they don't fall into the googles, the metas, the amazons and microsofts fall into you fit into this unique opportunity -- >> they don't have the balance sheet either >> they don't. things are getting better and they're starting to grow again they're not looking to sell -- >> but you're saying thatey're buyer. it's not a business that has the balance sheet to start rolling up businesses. >> no, but as they grow, they have the ability to make acquisitions without a threat. meta had to go to court to buy a small gaming company call "within. they had to get out of givy because the government thought meta buying thisle little comp was threatening the market i think it is an advantage for some of these companies that don't have that sort of

regulatory threat that we're seeing from the giants >> let's say for a moment and stipulate that it's possible that the deal doesn't happen what happens to the future of activision, blizzard, in your mind >> brandon ross, my partner, has been very clear. things are going well at activision there is this view that this deal falling apart could bode well for what's happening at activision in '24. i'm not sure he believes people will be disappointed >> are you of the view that bobby sold out too cheap >> i think things are going very -- there's definitely a '24 story that he's excited for bobby to show. >> do you see a possibility of activision being a buyer in future >> that's a great question

activision made a great purchase could there be more consolidation? sure i think that's certainly not out of the question at all >> and then does this stop microsoft? what does it do to the future of their gaming product >> that's a great question it would be more of a question for my partner, brandon. a lot of the cloud gaming stuff hasn't really translated in terms of where you see microsoft go and build from here both companies -- this was a very logical merger that seemed to be very good for consumers and it still sort of battles us why we're even talking about this trans, baction being blockd >> your partner's name is brandon at -- >> yeah. >> i'm not even going to say it. i meant -- you know, brandon, we

always say -- brandon as a new -- i wouldn't say it if we get him on i could say it but i won't tell me what we're going to talk about, the youtube story with tiktok >> growth has been slowing at youtube. they were down a couple percent of q4 last year. numbers look a little bit better, revenue looks a hair better they're clearly continuing to feel pressure from tiktok. no doubt about it. they are competing for space and tougher economic environment overall this is a slightly better number for youtube. things are moving in the right direction. they're facing more and more competition. there's no doubt reels is getting better, you'll see meta report tonight and the overall repro real product snapchat is starting to roll out ads and their ads are improving,

we like snap a lot all of this is competing for time and it's entertainment time spent. that is adding pressure, especially as youtube switches from long-term to short. and it's creating an opportunity for others to take a little share where they might be paying creators a by bit better than w they're seeing out of shorts >> i have a lot of thoughts from you on what the future looks like i was reminded of it watching a netflix show, i don't know who does "succession," i guess it's hbo. >> it's hbo. >> just a few years ago they were making fun of mr. logan roy because he wanted to get into all thee businesses and wasn't embracing digital and streaming and everything else and the most recent thing i saw is zazlov was

doing well is everything we thought we learned untrue maybe thievehe was right, buying >> he's done a great job retrenching and realizing they didn't have the balance sheet, at five times leverage, they didn't have the balance sheet to basically compete head to head with netflix you're seeing them scale back and go back to a hybrid strategy of streaming but focusing on what warner brothers does well, which is being an arms dealing, sell content to the highest bitter it's something warner brothers done for its long history. netflix is clearly the winner, you're seeing disney retrench a little bit the streaming wars that were so intense where everybody was

throwing money to get subs without a business model, you're seeing an entrenchment it's not a bad strategy for warner brothers discovery. if you had their hand and looked at what their chases are, they are making a logical decision to focus on free cash flow and not chase a business where they don't have that global expertise to compete head to head with big tech companies >> i mean, hulu -- >> we'll see andrew and i have been talking about on air who buys hulu and we still can't figure it out >> who wants it? >> it's like a hot potato nobody wants to touch >> would you pay 30 billion for hulu right now it doesn't make money. what are you even buying what content goes with it? it's not clear >> but it may very well be that's why it ends up staying the disney >> that's not great for disney

stock. you see the treading water, everyone trying to figure out what does iger do with this asset? it's really frustrating investors right now. they don't want them spending $10, 11 billion to get nothing >> all right, rich how many employees do you have overall? >> we have a very strong team of eight people >> excellent, eight is enough. >> i like that that's well done, joe. >> when we come back, house ways and means committee chair jason smith will join us and give us an update on the d.c. debt ceiling negotiation, including when we might actually see a vote in the house. stay tuned you're watch bing "squawk box" d this is cnbc

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we could see a house vote today on kevin mccarthy's plan to try to raise the debt limit the house rules commit approving terms of debate for the bill but unclear if it has enough overall republican support joining me is the chairman of the house ways and means committee. is there enough support?

>> absolutely. the question is is will it be later today or tomorrow. we clearly have enough republican votes, according to my math to pass this and send it to the senate. we do know that the white house and the senate has refused to negotiate whatsoever and hope flip they'll come to the table after house republicans send this over to them. >> does your math include the eight republicans and states say they're not going to vote for it because of ethanol, does it include six other members and george santos who say they're not going to vote for it how do you get the math? >> i'm not going to say what members are where and who is for and against but i'll tell you that i'm confident that we have the votes from the math that we've done i've been part of negotiations for the last three months with house republicans and helping craft this package speaker mccarthy has done an incredible job and we're going to deliver that today. >> i don't know if this is like

a blink once or this or a blink twice. becky just reeled off a number of names with you i think you're all familiar with, our audience, the public, these are elected officials they're familiar with. can you give us a sense are any of those names voting in favor of this? >> i think you need to ask them. i'm not going to speak for themselves because whenever you do whip votes -- >> i know but you are speaking for them in some way without trying to speak for them up see you see what i mean? >> let me say this you can only lose four votes we're only going to lose a handful of votes and we'll pass it out of the house of representatives. you just listed way more than a handful of votes i guarantee you we'll have the votes to move this >> is it clean or are there changes and amendments may to it >> there were a couple changes made in the rule committee last night that addressed a lot of concerns >> like ethanol?

>> the iowa folks, those were made in the rules committee last night and there were a few modifications in regards to some work requirements but we're moving forward and going to have the voulttes on the floor >> was concern was if any changes were made, like ethanol, it would mean other members would come forward and talk about what they would like to have added, too. is that the case or do you feel you have everything you need changed at this point to have those votes? >> i feel confident we have the votes. the big concern is the fact that house democrats are not even willing to help work we have been crystal clear that we need to increase the debt limit and address some kind of fiscal reforms there's not a red line of saying it has to be a, b or c, we just need something we need the white house to negotiate with us. we cannot allow our country to default and it's reckless that president biden is refusing to negotiate with house republicans. hopefully whenever we pass this, he believes we don't have the

votes, he believes republicans can't pass it. think about this -- i have never in my tenure as a member of congress ever voted for a debt limit increase, but i helped craft this legislation, i'm voting for it, it's the right thing for america. >> chairman, what do you think of the idea and some of democrats would say it is reckless to be using this debt limit as a negotiating ploy, it you will, that it should be a clean raise and if you want to discuss the budget, discuss the budget but that these should not be connected or related the way they are >> well, then, they must not be following history because this has been the norm. what is not the norm is a blank check increase they never did that under trump. they tried to say they did they did it three times and it was always tied to something the 11 largest fiscal reforms in history since 1985 were tied to the debt limit

the one led by vice president biden under obama in negotiating the caps agreement in 2011 >> are you surprised that trump i think it was back in 2019 said the debt limit should motnot be used as a chess piece in this way? >> you should never use anything as a chess piece but when you're raising the debt, the american people deserve fiscal accountability and we cut $4 trillion and raised the debt limit 1.5 trillion >> chairman, we will see what happens over the next 24 hours we look forward to having you back on the program as this hopefully develops one way or the other. >> thank you, andrew >> thank you >> is that news anywhere, becky? >> i'm looking it up it's just been out in the last 20 minutes they are rescinding large swath of the reduction act including a billion dollars to reduce --

>> that's ethanol. >> changes the bill would have made, for instance, for cashon dioxide and the ethanol stuff is in here, too make an exception to allow some tax credits to continue for renewable energy it would repeal the credits going forward but tax perks would be allowed for those who locked in binding contracts for producing clean fuel before april 19th that must be the ethanol >> at one point yesterday -- >> there were eight of them. >> some people were saying they felt more confident monday than yesterday. but maybe this now -- >> changes were made after 2 a.m. >> really? >> democrats were saying this was a disgraceful amendment that materialized from your midnight stands if they're going to get the votes, they're going to need these. the question is will there be other republicans that say i want this? >> it happens all the time in national government. all politics are local

>> coming up, the major averages coming off their worst session in a monday. katie stockton will join us. and we'll dig into boeing, with the stock up more than 3.5%. stay tuned you're watching "squawk box.

. we just got an update on the

hard-hit first republic bank after shares were cut about 50% yesterday. thes they'r the shares are falling again. days after the government seized silicon valley and banks last month, bankers were knowledge of that situation ctell cnbc they could ask mega banks to buy bonds and other assets from first republic at above market rates for a total loss of a few billion or face $30 billion in fdic fees if the california-based lender fails. the stock this morning down by another 11.4%. >> boeing posting a wider than expected loss. it affirmed guidance for the

next few years joining us is managing director. the stock up this morning. basically 3.5% we're at 209.80. what do you think is fair value for this company at this point >> i think if you look at the guidance implies free cash flow, 9 to 10 billion in 2025-26 >> and you look at these earnings you say, i mean, the market seems to like it the question is how much do they like it and what are the risks ahead? >> well, the markets are breathing a sigh of relief that the company didn't lower expectations for 747 deliveries this year, currently at 400 or 450. as you know, there was an issue with one of their main suppliers a couple weeks ago with some fittings on the aircraft so

they've had to slow deliveries of the 737 as they work through that issue i think there was big concern heading into these results you're not receiving that today with these results, which i think is incrementally positive. margins in some of the business like commercial airplanes a little softer than expected but in the aggregate with the company maintaining a full-year outlook you're seeing some positive reaction to that. >> how do you spend time thinking about where interest rates are going and what the cost of a loan is going to be to actually buy one of these planes >> it's a great question certainly it has an impact on the airlines and the lessors remember when rates are going up, typically coincides with times of economic expansion, which means passenger and cargo volumes are good and they tend to equal out if you see a surge in rates that would inject undue risk into the

capital markets, that would be a risk for airlines and their ability to finance the aircraft. on the other hand, the risk is fundamentally still on the sideline boeing still faces risk with getting suppliers to keep pace on the production of the portfolio, the 737 and 787 and the surge in interest rates are putting pressure for those looking to finance materials and working capital and working higher to support higher production rates >> appreciate your presence this morning. appreciate it. >> we are just seconds away from the march durable goods data dow futures up, and the nasdaq with a lot of strong results

last night indicated up by about 125. we've continued to keep an eye on what's been happening with treasuries while the yields are in the green, you're still talking about yields quite a bit lower than where we had been the ten-year back to 3.416%. you've got the two year now below 4% last we're we were at 4.2% now it's at 3.928. rick santelli is standing by at the cma in chicago rick, you have some data for us. >> yes, we're expecting our preliminary march reads on durable goods. this can change in a couple of weeks and the numbers are hitting the wire expect the number up around 7% it's is much, much better. i can hear ten-year yields going up right now, a strong number up 3.2% the last time we could put a face of that type of strength

inside this market, you're talking june of 2020 when it was up -- oh, i take that back i take that back we were up a little over 5% and that was in 2022 excuse me. it certainly gave auch lot of ground there we can see the effects of transportation, that's still a half a percent better than expectations and nondefense extra aircraft, proxy for capital good spending, here's the first fly in the ointment, down 0.4%. that's month over month. yea year over year those numbers have turned south and shipments down 0.4 of 1% as well so, as i said, these are the best numbers of the year on headline and we see that yields did pop. but as the rest of the day

scrutinized, we're back to that 341. and as becky was pointing out, ten-year note yields should they close here would be at a two-year high yield and we can see there has been pressure on yields and some of it is due to the issues after republic bank information yesterday. i'm sure that added in but the turnstyle of buying was already well in place, well before the results of republic and before the two-year note auction. we are just in that mode if you look at some of the issues causing many investors to think maybe recession, i'll give you a new one they're looking at they're looking at the junk spread against treasuries versus the high yield or the investment grade spread against treasuries and the difference between those. so in barkley's you're talking about 500 basis points on high yield, you're talking rough 150 basis points on investment grade. if you subtract the two, the

difference of 350 basis points is the new sign traders are looking at, that wideness there between the two is historically a recessionary indicator >> more indicators we have to watch. >> the chunkier ones are the ones at risk in a slowdown. >> rick, thank you always teaching us something >> what do you see when break it down, steve? >> less than meets the eye here. that big pop in the headline rick was talking about is really boeing it's civilian aircraft the numbers are so small i have to put my glosses on for that. if i look here at what non-defense aircraft, that's boeing new orders up 78%, down 8.4. boeing gets 50 orders one month, has five orders the next, that was february, a lousy month for

orders march apparently a good number but you take that away and there's weakness in there. hey, why wouldn't there be weakness there's uncertainty about the future, there are higher interest rates so the key thing that rick pointed out and i'll just underscore it, it is the nondefense aircraft -- i'm sorry, nondefense capitalist aircraft and that was down 0.4 after being down 0 ha.7 business investment looks to be weak right now we'll get the numbers tomorrow that was pretty good, better than people expected, about 2% but the expectation now is we're sort of right now in the zero quarter, in the second quarter of the year where it's supposed to go flat and that's the expectation out there plus 0.4, depends upon what wall street forecaster you look at i want to take one quick look, not at the may futures which has the quarter point from the fed dialed in but the june futures,

which will tell you that the odds-on bet right now of the market is that it's one and done hike in may and go away maybe is what we're talking about there's a 70% chance roughly of no change. that's the expectation right now. that's unchanged this morning and that has to do everything with the idea that the durable goods numbers and some of the other stuff is expected at least this quarter to be not so great. guys >> steve, thank you. >> i'm not seeing much move in the yields, right? >> no. >> why not >> rick pointed out, we're already at the low >> but once again, i saw that number and went oh no! it's like what am i seeing durable goods, andrew. durable goods are good they're good we want strong durable edp goes up. but my initial reaction is oh

no, the fed's got to it's just got to >> coming up, a technical look at the markets as we head to break, check out some of the biggest companies reporting results this morning following hilton, humana coming up on cnbc.

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welcome back to "squawk box" this morning i want to bring you an update on the breaking news story of the morning. great britain blocking missouri a microsoft's deal for acti vvisin how does an appeals process work in the u.k. and could they win and ub out with a report to the appeals tribunal typically it's taken an average of 5.5 months. if that's the case and this were to go 5.5 months, becky, you'd be way past the point of no return in terms of when there was drop dead date on this thing. you'd effectively have to get both sides to agree to

continue -- >> to continue the deal. by the way, my guess is that would not be free. it's not just a matter of -- >> it might not be free. >> money's not free anymore. >> the secondary piece is since 2019 according to ubs, they looked at what they say are -- there's been seven situations appealed well, in four of the situations it was dismissed immediately and by the way, you're appealing to the same people so you're going back to them saying -- >> thank you, sir, may i have another? >> rethink this. three of them were ordered for remittal to be reconsidered but effectively in all three cases where that took place, they still lost so the chances effectively, and i know both sides are now saying they want to appeal, they plan to appeal but the chances look at least from this research slim by the way, ubs saying their stability at activision shares

at $75 a share that's where they say the low value would be without a deal. >> i would say brad smith from microsoft, his statement said they are still looking for regulatory -- what was the wording that he used on it basically it sounded like they still want to negotiate, regulatory -- >> the question is can they go back -- >> can they say there is something else -- >> to reconsider at least according to this i imagine in the three cases where they did reconsider this, there might have been some back and forth. >> i was confused as to whether there was an appeal process. i heard there was no appeal effectively because you're just asking the same people to reconsider >> major averages coming off their worst day in more than a month. our next guest said a deeper pullback could be in the works katie stockton, founder and managing partner and a cnbc

contributor. mike santoli got my attention yesterday, he said that some of the overbought conditions that we've seen in previous -- when we've gotten to this level, there's been a range but the high end of the range. this time it's been around long enough that the joverbought condition was worked off, which made me think because of the rally you've been steadfastly thinking this was range bound and would events ually head bac town to the october lows one of these days you're going to say, wow, yes, but maybe not today? >> well, we'll start with the good news and the good news is that the vix did break down below the support level that we've been watching.

essentially that means the s&p 500 should eventually break out. we were watching for resistance and that level should be surmounted at first we expect a deeper downdraft. that's what we're focusing on near term still, especially with resistance having been left in fact and we are seeing a reaction to that overbought condition. there's a short-term momentum game that a lot of people use. it's been one of the best market timing devices over the past year or so and it just turned down for the s&p 500 it was already pointing lower for the nasdaq 100 and it suggests that this pullback can stay with us for maybe two to three weeks at a minimum we want to stay on the defense for now. but the chances of a high or low even versus december, the initial support being around 380 are now higher given that vix

breakdown. >> you were probably watching crypto it kind of in your view had moved above some significant levels indicating maybe it was at laeast going to hold those levels and not go back below 20,000 again it's up 8% today it initial lively backed off tow 27,000, now back almost to 30,000 just in the blink of an eye. >> volatility is amazing there, isn't it we have seen a breakout, a base breakout from not bitcoin but a lot of the coins as well and that is an intermediate term positive but we still think that risk is heightened there short term we're not a buyer, not into an 8% up day. we say that because there are overbought conditions and with volatility so high, to which

bitcoin is positively correlated, we give it some room the former break outpoint is around 25,200. so that's our initial point for bitcoin. >> we didn't get to talk about the 10 years and yields enough last time. but i think you said we are still in an up trend for-year-olds and at 4% it's probably going to happen again on the ten year. that is very significant if it were to stay here, i just don't see any way the fed can feel that great about what it's doing. >> yeah, i don't disagree. with the yields we've really had to focus on each individual time horizon. short term to us they look a little bit higher. intermediate term they look sort of sideways to lower still, but withins context of their long-term trend. we do expect treasuries as an asset class to do better versus equities and we've seen that to

some degree, some stabilization in relative performance. we think they're a very viable asset class at this time with yields to back and fill, move jove all somewhat side ways to lower for the next few months, but we see that as a likely sort of digestion of lthe long-term trend that has support at 3 1/4 initially. >> that sounds like a recession indicator. stocks not as good, bonds good you don't ascribe any type of philosophical intents. you don't want to say that i guess. >> i don't have it but we try to keep it very pure and watching these in price and yield terms it would suggest something like that perhaps and as we know, the market doesn't tend to bottom before a recession, it happens during a recession with that in mind, caution near

time is warranted. >> is it disparaging technical analysis reading the tea leafs versus reading the charts? >> i thought we were all past that, reading the tea leaves we're not trying to be overpredictive we're trying to get probabilities on our side. >> there's some art -- >> and a science >> and you need fundamentals and tech technicals both. it's like nature versus nurture when you try to figure out how someone turns into me. >> using math and trends, which we're all doing. >> thanks, katie coming up and two megaaps c down, three to go. we'll talk about what to expect when meta reports after the bell stay tuned you're watching "squawk box" on cnbc

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he mentioned the committee had made some changes to house speaker kevin mccarthy's bill. the rules committee advanced the republicans' debt limit package. that teed up a vote for as soon as today now, that bill was amended to speed up implementation of work requirements to remove sections that would have repealed biofuel tax credits. those have been key sticking points that could have prevented republicans from whipping enough support to pass the bill now we're going to have to see

what happens next. meantime, want to get down to the new york stock exchange, jim cramer back from his visit with the cowboys talk to you, cowboy. what do you make of what is a different game this morning, which is activision blizzard and microsoft? >> last night, microsoft said some incredible things about gaming and how they're doing, and alluded to what this is, but without thinking that it really matters. i thought it was pretty stark. it was almost as if they knew, look, we may not get this, but look at our gaming, and then they said, listen, our gaming is like the best ever so i think that microsoft stock justifiably went up, because they don't need it i know that sounds strange they didn't need it. >> okay. but let's flip it around do you think that activision needs it there are some people that say activision is doing so well, they don't need it >> they don't need it. i don't own activision i'd buy it right here. of the gaming companies, i know i absolutely understand, take two, not doing as well

electronic arts, not doing as well but if you listen to strauss from take two, he was saying second half could be good. i think that activision blizzard right now is good. i think you have a really terrific situation microsoft does not need it that was an unbelievable quarter. and i know first republic is such a downer that we have to talk about it endlessly, but microsoft is bigger than first republic >> we do, though, because microsoft is much bigger, but i think there's a concern about whether -- hate to use the "r" word, not recession, but run you have the stock now let's get first republic on the screen, off 12%, after it was down 49% just yesterday. we're at $7.09 right now and i think the question is, if you are a depositor at this bank, and you're watching this, does this change anything? or do you say, you know what, i'm protected, it's fine >> maybe if you're a depositor and you don't care, maybe you just kind of write off the money, yeah.

i don't know who stays with them no bank has ever survived that's lost 50% of its deposits i like -- some people were telling me they're blackmailing the other companies. i say, no, they're playing hardball i'm taking the word "blackmail" off the table. >> i don't think they're in a position to play hardball, if you know what i mean, jim. >> well, they are -- you're going to have to -- the fdic are going to have to pay them. i think a lot of people would rather pay the fdic. i have to appreciate the scrappiness. they are the rich person's bank, so i know lenin would be so in favor of what's happening. i haven't been in touch with lenin for a long time, but he was my great-great-uncle >> i also want to get your thoughts on ilumina at some point. >> he made it sound like business is good i love the holy grail. >> going to be fascinating we'll talk to you soon thanks back after this. what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today,

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u.s. bank. ranked #1 in customer satisfaction with retail banking in california by j.d. power. meta is set to report first quarter reports after the bell tonight. joining us on that stock and the rest of big tech is paul meeks, ind

independent solutions wealth management portfolio manager while the street is cheering the results we've seen from alphabet and microsoft, you say microsoft is the only one that you would actually buy on the news we got last night why is that? >> well, both of the companies did what they had to do. they had to show that they weren't about ready to fall off a cliff, and they did that, but the problem with alphabet, relative to microsoft, is i thought microsoft's quarter was much cleaner alphabet came in with operating income expansion, but really driven by some accounting changes. they changed their accounting for depreciation expense, also for stock-based compensation also, they shifted some costs out of google cloud into other areas, and that shows that the google cloud was profitable for the first time i'm not saying it's necessarily widespread financial shenanigans, but it definitely wasn't the clean quarter, and microsoft's quarter was much cleaner, and so, no surprise,

microsoft will open up 8%, 9% this morning, and google will be flat to slightly up. >> you wouldn't sell alphabet shares based on this, though >> no, i actually think that alphabet, over time, will be fine they'll have a nice call option upside to a.i. if and when that becomes a big deal, and i think it will be, not in the short term, but in the longer term in the meantime, if we have a recession, which i think we will, but if it's short and shallow, which i think is the case, this is the company that's primarily driven by digital advertising revenues,and as long as companies can spend on their ads, they should be okay, because a lot of people forget about the core business, which drives that company, is probably fairly sensitive to economic conditions, and i think we're going to be in and out of a recession fairly quickly, and i don't think the recession comes until probably at least early next year. >> what are you expecting tonight with meta? what are the key points or things that you'll be listening for? >> it's the same thing we're not expecting, with meta or any of these mega tech

stocks, revenue acceleration we actually expect a year over year revenue declines, though modest, and the whole thing with meta is, you know, mark zuckerberg said it himself, it's the year of efficiency show me that they've already shown that since they had the disastrous quarter in the third quarter of last year, so show me that your costs are under control. show me that you're navigating your resources to the latest and greatest, and i think the company will continue to be rewarded because it fewas a sto that got waxed so badly last year, that even though it's had a big pop this year, it still is not egregiously expensive, so i think there is some upside >> you own these three stocks, microsoft, google, meta? >> i absolutely do not myself, but for clients. i think in any tech portfolio, you really have to have them, and then you trade around either large or small depending on conditions right now, i would probably lead

with meta, followed by microsoft, followed by alphabet. >> okay. paul, thanks a lot it's good to talk to you today >> best wishes >> you too let's take a very quick look at the markets before we hand things over. you see the dow futures now indicated up by about 70 points. nasdaq up by 146 the s&p, up by close to 13 that does it for us today. make sure you join us tomorrow right now, it's time for "squawk on the street. bye-bye. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. premarket is stabilizing after tuesday's selloff. lot of moving pieces today mega cap tech, ukraine, first republic, potential house vote on the debt limit, brent back below $80. our road map begins with big tech, though, nasdaq futures rallying after those better-than-expected results from alphabet and microsoft, but in this major blow to microsoft, the uk blocking the acquisition of activision iz